Peso hits all-time low of P59:$1, BSP cuts rates amid higher inflation forecasts

The Philippine peso weakened against the US dollar on Thursday, dropping to an all-time low of P59:$1 for the third time this year.

This depreciation matches the record-low last seen in October 2022 and follows a 25-basis-point rate cut by the Bangko Sentral ng Pilipinas (BSP) and new inflation estimates for 2025, which are slightly higher than previously forecasted.

The BSP now projects an average inflation of 3.2% this year, up from the previous outlook of 3.1%, due to recent weather disturbances.

Other factors contributing to the peso's depreciation include a $2.276-billion deficit in November's balance of payments and a decline in local equities with the PSEi losing over 70 points.

The market reacted negatively to the US Federal Reserve's hawkish cut, causing the dollar to strengthen at new two-year highs.

Bangko Sentral ng Pilipinas (BSP) is expected to continue defending the peso against further depreciation to keep it below or at the P59:$1 level.